Correlation Between G-III APPAREL and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both G-III APPAREL and Gamma Communications at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining G-III APPAREL and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III APPAREL GROUP and Gamma Communications plc, you can compare the effects of market volatilities on G-III APPAREL and Gamma Communications and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in G-III APPAREL with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-III APPAREL and Gamma Communications.
Diversification Opportunities for G-III APPAREL and Gamma Communications
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between G-III and Gamma is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding G III APPAREL GROUP and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc and G-III APPAREL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on G III APPAREL GROUP are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of G-III APPAREL i.e., G-III APPAREL and Gamma Communications go up and down completely randomly.
Pair Corralation between G-III APPAREL and Gamma Communications
Assuming the 90 days trading horizon G III APPAREL GROUP is expected to generate 1.65 times more return on investment than Gamma Communications. However, G-III APPAREL is 1.65 times more volatile than Gamma Communications plc. It trades about -0.02 of its potential returns per unit of risk. Gamma Communications plc is currently generating about -0.12 per unit of risk. If you would invest 2,840 in G III APPAREL GROUP on September 1, 2024 and sell it today you would lose (40.00) from holding G III APPAREL GROUP or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
G III APPAREL GROUP vs. Gamma Communications plc
Performance |
| Timeline |
| G III APPAREL |
| Gamma Communications plc |
G-III APPAREL and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G-III APPAREL and Gamma Communications
The main advantage of trading using opposite G-III APPAREL and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G-III APPAREL position performs unexpectedly, Gamma Communications can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gamma Communications will offset losses from the drop in Gamma Communications' long position.| G-III APPAREL vs. Gamma Communications plc | G-III APPAREL vs. Eastman Chemical | G-III APPAREL vs. TIANDE CHEMICAL | G-III APPAREL vs. KRISPY KREME DL 01 |
| Gamma Communications vs. Games Workshop Group | Gamma Communications vs. Penn National Gaming | Gamma Communications vs. Zijin Mining Group | Gamma Communications vs. QINGCI GAMES INC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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